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Lebanon completes $5.5 billion debt swap with central bank

May 20

Lebanon completes $5.5 billion debt swap with central bank

The Lebanese government completed a $5.5 billion debt swap with the central bank on Friday, issuing Eurobonds to the central bank in exchange for Lebanese pound T Bills, the finance minister said.

Minister of Finance Ali Hassan Khalil said the swap meant the ministry had secured its foreign currency financing needs until the end of 2018. The process also strengthened the central bank's dollar reserves, a ministry statement said.

Lebanon is the world's third most indebted nation after Japan and Greece, with a debt-to-GDP ratio of more than 150 per cent. The International Monetary Fund has said Lebanon's debt trajectory is unsustainable and the government needs to take immediate action to boost growth and reduce its budget deficit.

Khalil first announced plans for the debt swap at the end of March ahead of Lebanon's parliamentary elections which took place on May 6.

In return for the Eurobonds, Lebanon's central bank will subscribe to 8,250 billion Lebanese pounds ($5.5 billion) of T Bills issued by the finance ministry for maturities of 3-10 years at an interest rate of 1 per cent.

'This will provide a debt service to the treasury of $1.4 billion over that period,' the ministry statement said.

The ministry said it would consider another issue to global markets when appropriate at the end of this year or in early 2019.